The Essential Newbie Guide for Buying Gold & Silver

Bankers have engaged in a huge misinformation campaign against gold and silver to deliberately keep people out of buying physical gold and physical silver and the best mining companies, that while paper, are backed by actual physical gold and physical silver. If you’re a newbie thinking about buying gold and silver assets for the first time ever, here’s what you need to know.

(1)True gold and silver bulls are NOT permabulls; however, many stock bulls are permabulls.

All those that truly understand the gold and silver markets understand that bankers support the global Ponzi fiat currency system by deliberately creating massive volatility in gold and silver paper derivative markets, and thus, the reflected prices in physical markets. Thus, we expect gold and silver to be volatile every year, we expect periods of significant downside volatility due to banker raids in gold and silver futures markets, we expect the bankers’ use of HFT algorithms to deliberately distort prices in gold and silver markets, and we expect various CME regulatory changes designed to force longs to liquidate their positions in futures markets. True gold and silver bulls will never tell their clients to buy gold & silver 24/7, 365 days a year, always attempt to manage volatility every year and never advocate purchases of gold and silver at year highs but do advocate purchases of gold and silver on dips at yearly lows. Just see this article "Fear & Panic are the Banking Cartel’s Weapons V. the Gold & Silver Bull. Patience and Logic are the Best Defense" as an example of how we advocate buying gold and silver assets on huge dips when they happen versus chasing them higher when they go on huge runs.

To the contrary, the global commercial investment industry is perpetually trying to deceive clients with their permabull strategies in terribly performing global stock markets. They will point out the fact that US stock markets have doubled from their lows a few years ago, but simultaneously warn you against ever buying gold and silver stocks because of the huge volatility of this asset class, even though the HUI gold bugs index has nearly tripled from its lows in October 2008 and slaughtered the performance of the S&P 500 when respectively comparing both indexes from their lows in 2008. But no commercial investment advisor will ever tell you this fact, because if daily trading volume picks up in the mining shares, manipulating their share prices becomes much more difficult a task for the bullion banks. Thus, their strategy is to keep people out of the mining stocks, even during times when their valuations are ridiculously low, as they were in October of 2008 and as they were in May of this past year.

While it is true, that mining stocks are wildly volatile at times, if you wanted to take the unwise strategy of buy and hold that commercial investment industry advisers always advocate, one would still have been vastly better off invested in the HUI index versus the S&P 500 index over a long “buy and hold” period. From January 1, 2001 to present day, the HUI gold bugs index has returned a nominal, cumulative yield of 917.30%. The S&P 500? Though a laughable 7.44% return over the past 12 years, advisers at commercial investment firms have been, and are still, telling clients that buy and hold is the best strategy for 12 straight years! PM mining stocks sometimes return the entire 12-year yield of the S&P 500 in two days. If you have never invested in gold and silver assets, it would be unwise to start to do so without the guidance of someone that understands the volatility of these assets and that can guide you into purchasing at the low-risk, high-reward price points that develop every year or to do so without taking the time to truly learn how gold &amp; silver markets operate. Learn the truth about the mechanisms that control gold and silver markets, and the risk of volatility can be greatly mitigated and subdued.

(2) Volatility Does Not Equal Risk

Bankers deliberately and artificially create significant bouts of volatility in gold and silver assets from time to time to create the perception that gold and silver are risky assets. Volatile? Yes. Risky? Laughable (as is Goldman Sachs’s recommendation last week to their clients to sell gold). Obviously I’ve demonstrated to you that yes, gold and silver are volatile, but even in the very volatile mining stocks, they returned a cumulative yield 123X’s greater than the S&P 500 index in the same past 12-year investment period. So are gold and silver assets (barring the dubious GLD, SLV and futures contracts) risky? No.

(3) Gold and silver are still CHEAP, not EXPENSIVE

People erroneously confuse relative price with valuation all the time. Just because gold and silver have risen 70% in a short-time period or have risen 300%+ over multiple years, people believe that gold and silver are expensive. Perhaps this is why, of all investable assets in the US, only 0.1% own gold (probably less own silver). Globally, only 1% of all global investable assets are allocated into gold, while 49% are in bonds, 36% in equities, money markets, 9% and other 4%, according to the latest study by the World Gold Council. If one understood the banking cartel’s price suppression schemes, which I have documented in general on my blog (www.theundergroundinvestor.com) since 2006 (and documented in depth for my members), then one would understand that the price of gold and silver are heading much much higher, which still makes their price cheap today. If you believe this just to be an empty prediction from someone you have never heard of, then just go check 7-year my track record on my aforementioned blog. My predictions about the behavior of gold and silver prices are there in black and white dating from 2006 when I was urging people to buy gold at $580 an ounce and silver at a fraction of its current price.

Sure it would have been better to buy back then, but this does NOT mean that gold and silver prices today still are not cheap, and that you cannot build great wealth with gold and silver going forward. On the other hand, you can find a prominent employee at some major global bank every single year of this existing gold bull that has told you that gold was expensive at $400 an oz, $500 an oz, $600 an oz, $700 an oz, $800 an oz, $900 an oz, $1000 an oz, $1,100 an oz, $1,200 an oz, $1,300 an oz, $1,500 an oz and now at $1,700 an oz. Furthermore, the great majority of the 1% invested in gold is in paper futures and ETFs. Along with some others, I’ve been urging people to stay away from the GLD and SLV ETFs, and finally our message seems to be gaining traction. Over the past few years, there has been a movement away from ETFs into physical instead. Just think of what will happen to gold (and silver) prices when 5% of global investment assets, instead of the existing 1%, pour into gold and silver.

(4) Gold and Silver Prices ARE actively suppressed by bankers

No, this is not a conspiracy but simply fact. Don’t let the analysts out there that say such claims are conspiracy and false convince you of their misinformation campaign. The circumstantial evidence of Central Bank and bullion bank gold and silver price suppression schemes is as overwhelming as the circumstantial murder evidence that existed against OJ Simpson. I’ve outlined some of this evidence in the video below for your review. As well, visit www.gata.org for a mountain of evidence. Thus, since all banking forces conspire to keep gold and silver prices low and not to drive the price higher, this supports my thesis that gold and silver prices are still cheap today. Remember, I was making these claims more than six years ago and ridiculed for my claims back then though the claims of gold and silver price suppression are much more accepted as fact today. Remember, the philosopher Arthur Schopenhauer said this about truth: "All truth passes through three stages: First, it is ridiculed; Second, it is violently opposed; Third, it is accepted as self-evident." In 2006, many in the commercial investment industry ridiculed for my firm stance that gold and silver prices were being manipulated downward by bankers. I believe that now we are still in the stage when the truth about gold and silver price manipulation schemes are still being violently opposed but that we will soon be moving into the stage when this truth becomes self-evident.

Always remember the plethora of examples that already exist when others were ridiculed for their commitment to exposing the truth about the global financial industry. When the first people publicly claimed that evidence was overwhelming that bankers were criminally manipulating LIBOR, they were uniformly ridiculed. Now, we all know this to be true. There is a psychological tendency to reject information that is new and novel to us and to stick our acceptance of the familiar. This is largely the reason why so many people continue to reject the notion that gold and silver prices are being widely manipulated today even though the evidence is overwhelming.

(5) Never leave your mining shares unencumbered.

Many people do not know that it is a common practice among brokerage firms to lend out gold and silver mining shares in a margin or options account to short-sellers that work against the best interests of those holding long positions in gold and silver mining shares. One can prevent this practice by holding all shares in a cash or Type 1 account and avoid holding any PM shares in a margin account (often called a “cash and margin account”) or an option account (often called a “cash, margin and option account”). If you own PM mining shares, do NOT leave them unencumbered by holding them in a margin account. If you leave them unencumbered, chances are nearly guaranteed that your brokerage firm WILL lend them out to short-sellers that will try to drive the price of your PM shares down. Of course, firms will still naked short stocks all the time and we can’t stop this practice, but at a very minimum, we should prevent our PM shares from being lent out to short-sellers. In general, avoid margin accounts as some brokerage firms will lend out your shares even if you have zero debt in your margin accounts. Finally, call your brokerage firm after you transfer or change your account to a cash account or Type 1 account, or if you already own a Type 1 account and request that they do not lend out any of your shares. Part of any margin account agreement is the "hypothecation and re-hypothecation" clause whether you read the fine print in your contract when you signed it or not. This clause allows a brokerage firm to lend out ("hypothecate") securities held in any margin account to short-sellers without your knowledge, which basically means that they will do this, and hurt your stocks in the process. With PM mining stocks in particular, one person ensuring that their PM stocks can not be lent to short-sellers will likely not make a difference, but if every single PM stock owner holds their stocks in a Type 1 account, this just may make a huge difference in muting or curtailing some of the raids that bankers periodically conduct against PM mining shares.

"The Essential Newbie Buying Guide for Gold & Silver"

Here are a few other videos that will help you truly understand the gold and silver market:

About the author: JS Kim is the Managing Director of SmartKnowledgeU, an independent gold & silver based research and investment firm fiercely dedicated to fighting the fraud of Main Street and promoting a return to sound money as a way to gain freedom from the debt enslavement tactics of global bankers. Follow us on twitter @smartknowledgeu.

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Many people are turned off by the upfront fees for purchasing metal. For instance, today on APMEX you can buy 2 10-oz APMEX Silver bars for $705 with a personal check (more for credit card order), plus $20 for Shipping and handling, for a total of $725, or a delivered price of $36.25/oz. The current price of silver is $32.90, so basically you'll need to make up $3.35/oz just to "break even". I don't know too many people who sell physical metal, but if you sell a bar you're not going to get offered more than the spot price. Things are different with coins, which may have additional numismatic value.

So if you buy today, how long will you have to wait for the spot price to reach $36.25? Two months? Two years? How long can the cartel extend and pretend? These are hard questions to answer.

"What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct." -Warren Buffet 12/4/2012.

In 2012 China's estimated imports of Gold will be 569 Tons. Recent IMF data also shows that at least 12 other countries increased physical gold reserves estimated to be 696 Tons in 2012. Total gold mined in 2012 is expected to reach 2,810 Tons. Demand for Gold is up 30%. -Eric Sprott

If the population in the USA is fearful why is it that very few own physical gold and silver? a) Media supression? b) Volatility created by TBTF? c) Ignorance? d) Lack of financial resources?

If major countries around the globe are buying gold what is the probability that gold will suffer a signifciant decline? (btw...China prohibits the export of gold.)

Avid readers of ZH know all of these things you list. I'd find it MUCH more helpful if you research and inform us how to buy physical gold without incurring 10% spread/commission on BOTH sides of the trade. sure, I can buy a 400oz brick and drastically lower that amount, but that's hardly viable for smaller net worth people, AND you need a good plan for storing it which can be just as risky as paper metals options.

So in reality, this article really is just old material, and therefore was a worthless read that I got thru in 1 minute of "I know this, read the next paragraph header, I know this, read the next.. until the article is finished and nothing new is learned.

your other posts can be good, but this one is a waste of time, even to the newly initiated metals purchasers. All you've done is convince them to buy physical and they'll end up paying 20-25% or worse to round trip the trade.

and then we could get into the tax implications of owning metals, which would further deter anyone from wanting to get anywhere near the metals unless there's a bonafide "run" occuring on them.

Bertie, unless you are strictly buying 1/10 oz. coins, or 1 gram bars, your argument is grossly exaggerated ---one is NOT going to incur 25+% premium spreads on the buy and sell, or "get crushed" by the trading costs (the net difference between the buy and sell on a single one ounce gold coin such as Maple Leafs and Eagles with most major dealers would be right around 2%, for example --- more than most stock trades, but hardly "crushing"). And you should know that premiums are virtually always at least partially recovered in the selling price; nobody sells a gold Eagle or Maple Leaf at spot, no matter the size of the coin (unless they are particularly dumb).

As for the tax ramifications, I believe that there are always tax ramifications for selling paper assets as well, so your complaint there is nothing but a red herring. You are going to incur tax ramifications, and pay capital gains, on ANY sort of (nominal) profits, whether on physical precious metals, stocks, bonds, or anything else. And for the record, the US capital gains tax rate on precious metals profits is NOT necessarily 28%, as often and erroneously stated --- that rate ONLY applies to those in the highest tax bracket.

Sounds to me like you are just another pro-paper shill trying to scare the newbies away from physical precious metals. Lord knows we have seen and heard enough of them already, even here.

One thing that I'm seeing in the physical market is that all of the coins coming out are relatively new. 2012 for Gold Canadian Maples and 2010 onward for Silver Canadian Maples. Which tells me that supply is coming from new production, meaning that physical wholesale storage is low.

It used to be, say five years ago, that gold Maples purchased would be of 1980s vintage. Not anymore. Today they're brand new. Minted this year. Very telling.

About a month ago I bought Gold Eagles, dated 2012. That was the first time in a long time I had gotten Eagles dated the same year I was buying. I will check again soon at the coin shop to see if your experience matches mine. If that is true (relatively little wholesale storage), that is indeed telling.

So, in summary buy some physical whilst the price is being suppressed by the banksters.

Surely that makes the banksters and their activities very, very "unamerican" as it means that Asia (inc. China), Europe, South America and Australia are all able to buy American Au and Ag very cheaply. The bullion banks are selling it cheap for a quick buck.

Bring on the lawsuits against banksters for 'unamerican activity' under the Patriot Act NOW!!

Which is the best investment vehicle in gold apart from gold in your hands? After all there are security issues too, and please don't talk about boating accidents. Robbers and irs agents don't care about boating accidents. Even a fanatic gold bug can't be serious about planning to live hiding in a fortress with his gold like uncle scroodge. I'm sure insiders have a better way to secure their wealth.

Ever seen a 100-oz gold bar? It's about the size of the jumbo Hershey bar at the Mega-Lo Mart, although quite a bit heavier. Five of those are roughly $1 million. Bury a couple in your yard, and find a few separate places in the house to hide the others. It's not difficult. Have a few 10-oz bars on hand as your 'give up' stash if you do get robbed/raided.

I wouldn't trust a safe deposit box at your bank; if it's not under your control, it isn't under your control! Same thing for precious metal depositories (and I used to work for one) - while I don't doubt for a minute that most depositories are safe from anything short of a small-scale military attack, they are not safe from political confiscation. And, unless you pay extra for 'segregated' storage, most depositories will co-mingle your PM's with others. Since they usually don't assay on acceptance, you run the risk of your perfectly fine PAMP 10-oz bar being swapped for a gold-plated tungsten bar when you come to collect. Sure, it's a small risk, but so is the risk of burglars breaking into your home wanting to know where your gold is.

I think that the danger of loss of physical metals in one's home, compared to the very real risk of loss due to bank closures, rehypothecation of "paper" metals, and other unforeseen hazards of a dying and collapsing financial and monetary system, are grossly exaggerated.

The one thing that banksters hate, above all else, is the average person removing their assets from the parasites greedy control and taking their financial destiny into their OWN hands/

Very true. Gold, in particular, is very easy to hide. Silver's more difficult simply because it requires more mass per store of value.

Now, the apparatchiks are going to try to seize it, that's a given. By keeping it in a secure, hidden location you will be able to tell the apparatchiks to stuff it. Do not be intimidated by the brown shirt thugs of the Frank Marshall Davis, Jr. regime.

It amuses, and saddens, me to see the bewildered and almost terrified looks on the average person's face when it is suggested to them that they buy physical gold and silver as a hedge against currency and financial upheaval or collapse. One might almost just as well suggest that they start indulging in infant cannibalism. Why they react in such a way is a mystery to me. Oh, how humanity has fallen!

My experience has been different, particularly of late. Everyone I know is either buying physical metals or is planning to. Invariably, every one of them is concerned over storage and possible loss through theft. Not surprisingly, many of them now own firearms and safes.

And tell the Noobs that a particular ingredient in being you own bank is that NO. BODY. ELSE. KNOWS. IT.. If people talk uncontrolled to others about their intents, or even only potential intents, then when times get desperate, monsters will lurk every where. This is the first thing I talk at length about when asked about PM's or any prepper storage.

Perhaps my experiences differ from your own, having taken place in the very capitol of conformity itself, southeast Michigan. One would think that having watched the city of Detroit implode and utterly collapse into sub-third-world decay inside one single generation might teach them that nothing, no matter how seemingly powerful and strong, lasts forever.

Sell the next market crash short and then buy metal and miners cheap. At some point the bullion baks will lose the power to smack gold and silver down. Not there yet. Sell miners on the next spike and wait for the elevator to the basement.

Global Terrorist Leader Ben Bernanke is printing Quintillions of Dollars and secretly shipping hundreds of tons of freshly printed paper to Terrorist organizations (disguised as Bankers) in over 150 foreign countries. Does anyone honestly expect the Metals to stay at this suppressed level? I went to my Bullion Dealer yesterday and his shelves were almost completely bare. Something is up.